The Cost of Congestion - London Arbitration 16/18
Posted on 7th December 2018 at 10:43
The main parts of a laden charterparty transit are the carrying voyage and the discharge. Owners take the cost risk of the first of these and (with aggregate laytime for all cargo operations) the second is charterers’ concern. To see who pays for what, the parties must identify when one ends and the other begins, and to signpost this the parties use NOR and agree restrictions on how, when and where that may be given.
The related notions of port or berth charterparties, an arrived ship and WIPON and other such shorthands all concern who pays when a vessel is delayed by congestion in reaching the berth, and the straightforward London Arbitration 16/18 [(2018) 1007 LMLN 3] prompts this quick review.
Under an amended GENCON 94 form the vessel carried corn from South America to civil war-torn Yemen, with the disport of Hodeidah later changed to Saleef, entry to which involved waiting at a holding area some 110 nm away.
It was said to be a port charterparty, so before owners could validly tender NOR the vessel would ordinarily have had to reach at least the place within the port where vessels usually wait. By contrast, a berth charterparty generally means that a vessel must first actually reach the berth. So under port charterparties charterers usually take the risk of congestion and owners do so under berth fixtures.
Here, though, clause 6 (c) of Part II of GENCON 94 had been replaced by:
“AT DISCHARGE PORT NOR TO BE TENDERED DURING OFFICE HRS WIPON/WIBON/WIFPON/WCCON [AND WITHIN OTHER TIME/DAY RESTRICTIONS].”
Having first tendered a (later, agreed ineffective) NOR on arrival at the distant holding area, the vessel twice re-tendered from the Saleef outer anchorage, while awaiting the required military approval to move in and berth. In rejecting each such tender, charterers said that the vessel had not arrived at the port because (the Tribunal presumed they had meant) the outer anchorage was outside port limits.
The issue was as to the validity of those later NORs.
These and similar terms are often inserted to let the vessel tender valid NOR before attaining a place (WIPON and WIBON) or a situation (WIFPON and WCCON) which might otherwise be needed. It depends on the exact wording in each case, but for example WIBON (whether in berth or not) can sometimes mean that what may have seemed a berth charterparty is instead a port charterparty, and as here these terms generally shift the cost risk from owners to charterers.
The Tribunal said that the WIPON (whether in port or not) provision allowed owners to tender NOR when the vessel had reached the usual waiting place for the port, even if that was outside the port limits. While it was uncertain whether the outer anchorage was inside or outside, it was definitely the usual waiting place, so NOR tendered there was valid and owners’ demurrage claim succeeded.
“Always accessible” - again
In an April 2018 entry we discussed the meaning given to this phrase in the “ACONCAGUA BAY”, and in March under London Arbitration 23/17 we noted owners’ unsuccessful attempt to distil a “reachable on arrival” warranty from amended safe berth provisions.
A similar issue arose here, as the disport change included the wording “always afloat always accessible to vessel’s draft”.
The Tribunal rejected owners’ argument that charterers had thus agreed to procure a berth to which the vessel could always proceed without delay. It was confined to draft issues, which had not arisen.
The brief report of a seeming routine decision offers the following pointers.
Firstly, the key context is allocation of the risk of the cost of delay. Always keeping that in mind will make it easier to consider these various matters, their individual significance and their relationship.
Secondly, as ever the proposed fixture wording should be examined as a whole. Thus owners could become aware, for example, that port option text and any related clausing might confine valid NOR tender more narrowly than perhaps intended. Owners might be content that they have a port charterparty on subjects, but small changes could have made it a berth charter - what does it say overall about where NOR could be given?
Thirdly, care is needed when citing the above common form abbreviations. They are often used as a complete set when some are inappropriate and might cause difficulty.
Lastly, beware wording on safe port or berth, or on draft or perhaps under-keel clearance issues. Such will not readily be construed as “reachable on arrival” or similar warranties. It is usually easy to achieve that by specific wording.
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